Top Stories for 2008 on PCBDAILY.COM

2008 has been a monumental year for us at pcbdaily. We’ve seen super awesome growth, expanded our content base tremendously and have reached out to more people than we had ever expected.

Looking back, the top stories covered good times and bad, with some of the bad times being good for others and some of the good times being bad for some.

4 of the top 10 articles talked about new additions to our area, namely Pier Park and the new Panama City Bay County International Airport (I know, we need a new name, and that will be addressed in 2009).

Walking around the mall, it is sometimes hard to imagine that this time last year, Pier Park’s roads were not even paved yet. Colorful buildings had been erect for some time, but the mall as a whole was still just under 2 months from opening. Looking back, it amazes me how quick somethings get done.

The new airport has hit milestones aplenty during 2008. Just a little over a year ago, the airport groundbreaking ceremony took place. When 2008 rolled in, the airport was caught in a legal battle with the NRDC and the Fiends of PFN.

In what was expected to draw out for months, the case was totally thrown out on January 25th, clearing the Airport Authority for construction immediately. The case was in many instances described as frivolous, and was not taken seriously by the judge. Opponents touted the failure of an affirmative vote in a non-binding referendum vote, but were never able to validate the fairness of the actual vote in regards to it being represented to all those affected.

For the new airport, 2008 brought the site from a stumpy, patchy 4,000 acre site to a cleared, grubbed site that is almost completely brought to grade with terminal parking installed, foundation work for the terminal complete, an asphalt-paved runway with some concrete and funding for a full 10,000 foot runway.

As the economy has plunged during 2008, so have real estate prices. Now, this has been a topic of hot debate on pcbdaily. I’ve oft been blasted by the Realtor community for spreading “bad news” and not “helping” the market by taking part in the media frenzy of negativity. However, the reality is, those that are complaining should be putting that energy into finding buyers because now is a great time to buy real estate.

Plunging prices mean good deals for all buyers. I understand the hesitation and skepticism, but things will not always be this way, and in 10 years, us agents will be doing our homework on baypa.net thinking to ourselves that we should have bought as much as possible back in 2008 and 2009 when prices were so cheap. 3 of the top 10 articles of 2008 were specifically about condo auctions in Panama City Beach. The Palazzo condo auction story took the cake, trailed by the Ocean Reef Auction and the cancelled Marina Landing auction. The Seahaven auction actually made it in the top 15 and is only a few weeks old.

The other 3 articles of the top 10 articles of 2008 on pcbdaily have to do with problems at local condos and the condo market as a whole. Laketown Wharf has been a sore topic for many with the developer being a self-proclaimed Trump with a Drawl – Jerry Wallace.

A largely vacant, 750 condo, elephantine monolith, Laketown Wharf actually had great aspirations, with some possibility of success had it come unto creation mid 2004. With huge swimming pools, a Balagio-style fountain/light show, a 650-seat live performance theatre, 5 restaurants and 1,000’s of square feet of retail space, it was planned to be almost a small town.

With less than 70 closings, it has been largely regarded as a complete and utter failure, but Laketown Wharf yet has a bright future with Corus stepping in. 2009 should bring something good for that development, hopefully.

Anyway, enough – enjoy the articles and looking back on 2008!

10.) Marina Landing Auction – CANCELED

9.) New Airport is on Schedule – Construction Update

8.) 35 Condos Sold at Ocean Reef Auction

7.) Pier Park – Margaritaville Grand Opening in Panama City Beach (video)

6.) Construction Update – New Panama City Bay County International Airport

5.) 50 Palazzo Condos Sold at Auction on Panama City Beach

4.) Problems at Nautilus Cove Condominiums?

3). Panama City Beach Condo Market Analysis After The Palazzo Auction

2.) Pier Park Grand Opening was a Smash Hit

1.) Laketown Wharf Busts, Leaves Developer Crying

Historically Low Mortgage Rates Should Kick-Start Housing Market

Through a series of rate cuts and capital market tinkering, the Federal Reserve has finally managed to push down long term mortgage rates to levels not seen in nearly forty years. The rate on the conforming thirty-year, fixed-rate mortgage was hovering close to 5% on Friday as the yield on the ten year treasury note sank to 2.07%. This thaw in the mortgage credit market is a welcomed sign that the ingredients are coming together to hopefully re-energize the comatose housing sector.

This huge swing came after the Fed lowered the funds target rate to a range between 0% and .25%. This marks the tenth time for the Fed to cut rates in the last 15 months.

The Mortgage Bankers Association reported a surge in mortgage application activity over the past week as homeowners rushed to refinance their existing mortgages. The combination of low rates and low housing prices should also create some demand in the purchase money market as well as consumers look for safe investments in these difficult economic times. Though a flood of buyers is unlikely, we can be optimistic that the first quarter of 2009 and beyond may see an increase in real estate sales and, hopefully, an end to home price declines.

For this and more, visit my blog at www.activerain.com/blogs/hpalmer

Hunter Palmer

Can we start buying again yet?

“The answer is a qualified yes,” stated a November issue of Fortune Magazine in an Investing column titled Time to Jump In?

The author then goes on to explain that now is a great time to get into, or get back in, the stock market. “Stocks aren’t exactly cheap, but for the first time in years investors can expect annual gains that should eventually approach double digits.”

Well, cheap is always a relative term. Stocks ARE cheap right now compared to where they were 12 months ago. With the 12 month high at just under 14,000, the DOW has dropped 41% since this time last year. I just bought a new pair of Sperry’s this weekend at a 40% off sale. I saved 35 bucks! That’s dinner and a matinee.

This is not to say that in the next 6 to 12 to 18 months that those purchasing stocks now will not lose money, because there is actually a good likelyhood that they will. However, the longer the term, the smaller the risk. The advantage to buying now is the tremendous long term gain potential. The disadvantage to NOT buying now is the risk of missing the bottom and losing an opportunity at potential long term gain. We may be in a recession, but historically, the market comes flying out of downturns. A study performed this year by Ned Davis Research found after studying 10 recessions after WWII, the average market return one year after the market low point was around 32%.

If the last 10 years have been on average bad, does that mean that the next 10 years will be bad also? Most likely no. In fact, odds are overwhelmingly good they will yield much better than average returns.

The interesting observation to be made right now is that the quite opportune time to purchase stocks now is actually parallel with the real estate market. Now is the time to be buying real estate. Like stocks, real estate is likely to continue to fall, but the bottom is near. Real estate, historically, has always been a good long term hold. Ownership is not without heartburn, but if you can’t stomach seeing your property values come down a little over the course of 10 years, maybe investing in real estate isn’t for you.

In many cases, prices have come down to 2003 levels. The average sold price on Panama City Beach during the third quarter 2008 was 10% less than what it was during the same period in 2006. On an individual basis, some prices have come down as much as 20 to 40%. Right now there are deals everywhere with motivated sellers willing to do just about anything to sell their property. In many cases, velocity sales has actually increased from last year, indicating the entrance of buyers into the market.

The best way to acheive healty returns in any investment is buying low. You know the saying – you make money when you buy, not when you sell. Now is the time to be making money.

Community Banks Lending Despite Credit Crunch

As regional and national banks eagerly rush to accept government bailout loans in the face of frozen credit markets, local community banks are quickly becoming the go-to source for mortgage loans in Florida. Despite tighter underwriting guidelines from Freddie Mac and Fannie Mae and a secondary mortgage market with little appetite for Florida real estate, local community banks are still stepping in with loans designed to accommodate the local real estate market. These local banks have studied the specific needs of our local market and are offering loans tailored to the unique needs of Bay and surrounding counties.

One example is Panama City Beach. On the beach, the vast majority of properties listed for sale are condominiums which sprouted up all along the coast in the boom years of the first half of the decade. The flurry of condo development was due, in part, to the easy flow of credit and lax underwriting and property standards so prevalent at the time. Now, as investors paint all of Florida with the same broad brush, Beach condos are left with the same stigma as South Florida and labeled as “condo-tels” – a name coined by Fannie Mae and Freddie Mac to describe a hybrid between a condo and a hotel with resort-like facilities and daily rental desks. Though Fannie and Freddie didn’t seem to draw a distinction between condos and condo-tels in the past, they certainly do now. Financing for these properties has all but evaporated leaving many prospective second-home buyers with no options. Enter the community bank.

With deep roots all along the Florida Panhandle and in their respective markets, community banks understand our unique market and have a vested interest in its success. One such local community bank is Vision Bank. With a sincere belief in the viability of the Beach condo market, Vision Bank is lending its own money by developing portfolio products designed to provide affordable options for the local real estate market and the out of state second-home buyers so crucial to its resurgence. Vision Bank, while adhering to sound lending practices and diligent underwriting, is offering bank-held, fully amortizing mortgage products with no pre-payment penalties and no hidden fees designed specifically for the condo-tel market. Vision knows this market and knows that more condo sales will help stabilize prices and draw even more potential buyers back to the Beach and all of Bay County. That is the essence of a community bank – investing back in the community.

For this and more, visit my blog at www.activerain.com/blogs/hpalmer

Hunter Palmer

Fed Lowers a Half Point – I Have a Better Idea

The Federal Reserve’s Open market Committee announced Wednesday it was lowering the federal funds rate to 1%, it’s lowest level since 2004. Yet mortgage rates rose on the news and continue to rise today. Though, on the surface, this may seem contradictory it exposes a symptom of the larger financial crisis we face. Since seizing Fannie Mae and Freddie Mac and passing the bailout plan, the Federal government has committed hundreds of billions of dollars in an attempt to thaw frozen credit markets and get the economy back on track. Unfortunately, all of that money is essentially borrowed.

Now the Feds are forced to sell billions in government bonds to fund their various bailouts and bank rescues flooding the market with an oversupply and thus driving down bond prices and driving up rates. This has a ripple effect throughout the capital and debt markets and increases the cost of borrowing for Fannie and Freddie. The higher borrowing costs are reflected in higher mortgage rates for consumers.

The bigger problem facing the Federal Reserve is that higher mortgage rates will have the effect of further weakening demand in the housing market. This will further amplify what is at the heart of this whole mess – declining home prices. As mortgage rates rise and home prices decline further, the rate of foreclosure is sure to rise putting even greater strain on banks and credit markets as well as Fannie Mae and Freddie Mac as the value of their assets depreciate and their ability to raise capital becomes more tenuous. To stop this vicious cycle the Fed and the Treasury must find a way to halt, and eventually reverse, the decline in home prices rather than continuing to merely react to each emergency caused by it. So how could they do it?

There have been a lot of proposals floated in recent weeks that aim to shore up the housing market, stop home price decline and prevent foreclosure. Some of these sound bizarre but viewed in the context of this historic financial crisis I’m willing to entertain anything.

One suggestion has been for Fannie and Freddie as well as banks taking part in the government bailout to offer mortgagors the option of a sixty year amortization. This would dramatically lower payments while not reducing the principal owed and provide an incentive to lenders in the form of greater interest income. Others say to allow everyone to refinance to some set fixed rate such as 5.25% that would provide payment stability and offer most borrowers some relief in the form of lower payments.

Still others have called for an outright principal reduction to lower mortgage balances to a point where borrower’s are no longer upside down in their homes. All of these ideas may have some merit but, in my opinion still do not address the root of the problem. We must create demand in the housing market so home prices will stabilize. How might that be done?

With thirty year mortgage rates creeping upward towards 7% for many borrowers, it is time the Feds start using some of the bailout money to back a program that would allow for a dramatically lower interest rate for all home-buyers coupled with a federally backed mortgage insurance plan to allow for lower down payments and longer amortizations. The lower rate, say 5.00% fixed for 40 years, along with a required down payment of 5% offset by a federal mortgage insurance premium of .75% annually but paid monthly would surely bring reluctant buyers back into the market. The increased demand for housing would drive up prices thus creating a win-win for the government in that the value of the bank stocks they now own would rise along with the portfolios of Fannie Mae and Freddie Mac’s mortgage backed securities. Banks, not wanting to miss out, would begin lending again and the resulting competition would increase liquidity in the credit markets and benefit the economy as a whole and reduce the number of foreclosures.

This plan would not be a reward for bad behavior, would not punish homeowners who have paid their mortgages on time and could be easily implemented through the FHA, Fannie Mae and Freddie Mac. Yes, it would be expensive in the short-run. But given the impotent attempts by the Feds to stop this snowballing housing crisis by hoping banks will lend again by throwing more at them are obviously not working. We need a better idea.

For this and more, visit my blog at www.activerain.com/blogs/hpalmer

Hunter Palmer

The Fed Leaves Key Interest Rate Unchanged

Yesterday, at the Federal Reserve’s regularly scheduled meeting, it was decided to leave the key interest rate at 2%. Economists had predicted a likelihood of the Fed raising the rate to help ward off inflation and slow economic growth.

This was the second scheduled meeting that the Fed chose to leave the key interest rate the same. Over the last 11 months, the Fed has lowered the key rate seven times. Given the economies fragile state with the weak labor and financial markets, it would seem that no move was the best move at this point.

In anticipation of the meeting yesterday, the markets rallied, up around 225 points before the Fed’s announcement. With the services sector falling less than expected and oil futures dropping to around $118 a barrel, the Dow had gained 330 points by the end of the day yesterday.

The S&P 500 rose just over 2.87% or 35.87 points and NASDAQ rose 64.27 points or 2.81%.

The Fed keeps rates the same

With the prime focus shifting to inflation, the Federal Reserve elected to keep rates the same during their regularly scheduled meeting Wednesday.

The key short-term interest rate was left the same, ending the rate cut streak that went back to last August. The short-term federal funds rate was left at 2% which means the prime interest rate stays at 5%.

With signs of inflation, the Fed made a statement that led some analysts to beleive that interest rates will go up later this year. Food and oil prices are threatening to rise sharply – raising the cost of credit could ward this off.

Although there was no mention of the stimulus checks, economists state that spending and growth would have been flat through the middle part of the year.

Should we drill for oil off the coast of Florida?

Technology has gotten so that we can do so with little risk of a spill. With little spillage during Katrina from the Gulf oil rigs, many elected and appointed officials agree. But, I ask, is 7 million gallons of oil a small amount?

China’s rumored to be doing it, why can’t we?

With the cost of oil skyrocketing, we have an immediate need to relieve some of the pressure this crisis is causing. But, would this really help?

With an estimated 5.2 barrels of oil in the Gulf, how long would it take for us to see a difference? Would this really alleviate pressure? Analysts say that it would take at least a decade for oil companies to obtain permits, get the equipment ready and do the exploration necessary to start pumping oil, and even by then, the newly pumped oil would do little to affect the global supply and in turn have little effect on the price of gas.

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Panama City Beach in Southern Living

There is an article about Panama City Beach in the latest issue of Southern Living, and they are raving about us.

“It’s time to return to Panama City Beach. If your memories revolve around crowded T-shirt shacks and gritty mom-and-pop motels, you’re in for a big surprise. This vacation magnet (your grandparents may have met here!) now sports a fresh style. It’s nudged the beach bum culture aside for upscale hotels and condos, good restaurants, a fabulous new shopping district, and sparkling high-rises.”

“Don’t worry. You can still relax in flip-flops and cutoff jeans in most places. The oyster bars, beach bands, and miniature golf courses with dinosaurs still thrive. Meanwhile polished businesses have opened that show a better look. Here’s our guide to the best.”

Read the entire article.

Housing Starts Post Surprise Rise

As reported by the Wall Street Journal:

By JEFF BATER
May 16, 2008 9:51 a.m.

WASHINGTON — Home construction turned up unexpectedly in April and showed surprising vigor, making the biggest increase in two years. However, the increase was driven by a surge in multi-family housing, while single-family starts dropped.

Housing starts increased 8.2% to a seasonally adjusted 1.032 million annual rate, driven higher by a surge in apartment building construction, the Commerce Department said Friday. Starts plunged 13.8% in March to 954,000, the data showed; Commerce initially estimated March starts down 11.9% to 947,000.

Economists surveyed by Dow Jones Newswires expected April starts to drop by 1.4% to a 934,000-unit annual rate. The 8.2% increase was the largest monthly climb since a 14.0% jump in January 2006.

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